2022 Global Digital Advertising Industry Report

The digital advertising sector is also often referred to as online marketing, Internet advertising, and web advertising. The market includes revenues gained by advertising activities conducted by organizations targeting consumers via Internet-enabled mobile devices and personal computers.

As of April 2022, there were five billion Internet users globally. That is 63% of the world’s population. In the year leading up to July 2022, the world's connected population grew by around 180 million. China has the most Internet users, at 1.02 billion, followed by India, with 658 million, and the United States, with 307 million.

The global digital advertising market was valued at nearly $486 billion in 2021, growing at a compound annual growth rate (CAGR) of 18.5% from 2016. By 2026, the digital ad market is predicted to grow at a rate of 15.1%, reaching $980.2 billion. Between 2026 and 2031, the market is forecast to grow at a CAGR of 12.8% to surge to $1793.6 billion in value.

Last year, North America was the largest region leading the digital ad market, followed by the Asia-Pacific region.

Growth Drivers

This historic growth has been a result of the following factors:

• Strong economic growth
• Emerging markets
• Developing technologies
• Growing Internet accessibility
• Self-service advertising platforms
• Government initiatives in developing economies
• Proliferation of e-commerce
• Increased availability of mobile devices
• Growing social media use
• Impacts of the COVID-19 pandemic

Future growth in the digital advertising space will be propelled by several factors, including:

• Increased advertising spending by end-use industries
• Increasing urbanization
• Growing adoption of 5G technology
• The Internet of Things (IoT)
• Traditional seasonal uplift
• Economic recovery following the pandemic

Obstacles to the future growth of the market include regulations, competition, security issues, the use of ad blockers, and data localization.

Market Segmentation

The digital advertising sector is segmented by the platform into:

• Mobile advertising (in-app and web)
• Desktop advertising
• Digital television
• Other emerging platforms

In 2021, the largest segment of the market was desktop advertising, accounting for 43.4% of the total market. Looking ahead to the future, digital TV is expected to be the fastest-growing platform in the digital advertising space, growing at a CAGR of 15.3% between 2021 and 2026.

The digital advertising market is also segmented by ad format:

• Digital display advertising
• Internet paid search
• Social media
• Online video
• Other

In 2021, the largest digital ad market segment was the Internet paid search market, accounting for 30.5%. However, online video is favored to be the fastest future growing segment in digital advertising, growing at a CAGR of 20.5% between 2021 and 2026.

The digital advertising market is also segmented into several industrial verticals:

• Media & Entertainment
• Banking, financial services & insurance (BFSI)
• Telecommunication & IT
• Consumer goods & retail
• Manufacturing & supply chain
• Travel
• Healthcare
• Transportation & logistics
• Energy, utilities & other industrial sectors

The BFSI market was the largest vertical segment of the digital ad space in 2021, accounting for 23.6%. Looking ahead, the media & entertainment sector is expected to be the fastest growing in the digital advertising market, growing at a CAGR of 18.3% between 2021 and 2026.

 Significant Market Trends

As the world learns to live with the impacts of COVID-19, there is ongoing growth regarding digital dependence. People are now spending more time than ever on their mobile devices, more people are working from home, and e-commerce remains on an accelerated track. This level of digital reliance is only expected to continue beyond 2022. Additionally, industries that were hurt the worst by the pandemic (travel, entertainment, and events) are now on the rebound, igniting new opportunities for advertising growth and new monetization channels.

Another trend is that today’s publishers are seeking greater control and that marketers are demanding high-value ad formats. It’s all about high touch and high control. There is significant consolidation happening in the digital ad space, which is pushing publishers to adapt their monetization strategies. There is also a growing demand for better bidding, mediation, and programmatic controls. At the same time, marketers are willing to pay more for high-impact placements (such as video, splash, and deep-linking-enabled ads), as well as interactive formats (such as reward-based, playable, and shoppable ads).

Also, cord cutting continues around the world. Over the top (OTT) and connected TV (CTV) are increasingly replacing traditional cable TV with on-demand and live streaming content. Ad-supported content allows viewers to watch shows without having to foot the bill for expensive subscription packages.

First-party data is also a major trend, with a large focus on privacy. People now have a better understanding of how their personal data is collected and shared, and they are taking more control over their privacy. Local laws are being implemented to protect user privacy, and major players are adapting their privacy policies as a result. Reaching relevant users is more important than ever, and publisher-owned, first-party data, as well as contextual placements, can drive value while securing compliance with policies.

Other significant trends include:

• More advertising on streaming services
• Growing demand for interactive advertising
• More adoption of artificial intelligence (AI) and augmented reality
• Rising storytelling concepts
• Adoption of conversational interfaces and chatboxes
• Automated, personalized email marketing
• Mergers, partnerships, and acquisitions for brand expansion

M&A Activity

The advertising technology industry saw a surge in M&A activity in 2021, and opportunities continue to grow within the sector. In 2020 and 2021, ad tech saw more than 3,500 rounds of financing and almost 1,500 M&A deals valued between $125 and $130 billion. In 2021, the number of worldwide M&A transactions was double that of 2017 and 2020. Some of the most significant deals include:

• Rubicon Project and Telaria formed Magnite, which reached a market capitalization of nearly $3.5 billion.
• Magnite then bought video supply-side platform SpotX, becoming the world’s largest independent source of CTV and video inventory.
• TransUnion acquired digital analytics company Neustar for $3 billion
• Fox Broadcasting invested $440 million in Tubi TV
• Integral Ad Science (IAS) spent $220 million to buy Publica and contextual advertising company ADmantX.
• Comcast’s FreeWheel acquired SaaS DSP Beeswax and XUMO, an ad-supported streaming service.
• Vista Equity’s bought programmatic advertising platform TripleLift
• Outbrain bought Video Intelligence

These deals all indicate that the highly fragmented market is clearly consolidating, often vertically rather than horizontally. Special purpose acquisition companies (SPACs) are also getting in on the action. As more ad tech companies go public, the more they are ramping up M&A. Also, major industry players are looking for new strategies and opportunities as many ad tech companies still struggle to reach long-term sustainability on their own. Rosy economic forecasts this year are also prompting big players to invest in ad tech companies. This market activity is likely to continue its momentum in 2022 and beyond, as dynamics will mostly remain unchanged.